Finance Minister: Hungary’s 2023 budget dedicated to utility price cuts, defence

Utility price cuts and defence spending are the factors of economic policy defining the 2023 budget, Finance Minister Mihály Varga said in parliament on Wednesday, presenting the 2023 draft budget.

The government maintains a disciplined fiscal policy with an aim of preserving stability and improving balance indicators, he said. Measures to increase revenues were paired with those cutting expenditures to cut state debt and the deficit, he said.

Draft budget

The draft budget calculates with GDP growth of 4.1 percent and has a 3.5 percent-of-GDP target deficit. It sees state debt falling to 73.8 of GDP and puts inflation at 5.2 percent for next year, he said.

The draft budget contains a HUF 670 billion (EUR 1.7bn) fund to preserve the utility price caps, and a HUF 842 billion (EUR 2.13bn) defence fund, he said.

The former was set up so that Hungarians will not have to “pay the price of the war and Brussels’ sanctions policy”, and the latter “because preserving Hungary’s peace and security is not subject for discussion”, he said.

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No extra burden for Hungarian citizens

Hungarians will not bear extra burdens for the funds as they will be financed form the windfall taxes levied at sectors turning excessive profits in the past years, he said.

Meanwhile, Varga noted that the 13th consecutive budget of the Orbán government is facing an uncertain environment “unprecedented since the economic crisis of 2008”.

The government is committed to following the values it had signed up to earlier: to independent, value-based politics and economic policy representing the interests of Hungary and Hungarians, he said.

Successful emergence from crisis and new challenges

Hungary has emerged successfully from a health and economic crisis with a 7.1 percent growth rate in 2021 and 8.2 percent growth in the first quarter of 2022, he said. The number of jobholders is at an all-time high and investments are growing, he said.

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The war in Ukraine brought new challenges and an even more uncertain environment, he said. The budget takes into account the impact of the sanctions on Russia, the war-related energy crisis and inflation and the economic crisis in Europe, he said.

Despite those challenges, the government will keep its promise to use resources to bolster the goals most important for Hungarians such as family support, pension protection, preserving the achievements of the utility cost cut scheme and strengthening security, as well as preserving and creating jobs. Keeping the economy growing is also a priority, he said.